With the rise of managed care, the primary care setting is assuming increasing importance as a site for the detection and treatment of all mental health problems. In this setting, panic disorder is prevalent, poorly recognized, and inadequately treated. Because it is both disabling and often masquerades as a variety of other medical conditions, it increases both direct (physician visits and unnecessary testing) and indirect (disability days) costs. This is a multi-institutional collaborative research project designed to implement an intervention to identify and treat panic disorder in the primary care setting and to study its clinical and cost effectiveness over a one-year period. Three sites (UCSD, UCLA, UW) will screen and identify patients in a university primary care clinic who suffer from panic disorder and test an innovative model of service delivery for panic disorder in this setting. Patients will be randomized to receive either care as usual from their primary care physician or collaborative care (CC). CC employs a combination of cognitive-behavioral psychotherapy (delivered in six sessions over eight weeks by a behavioral health specialist [BHS]), expert pharmacotherapy (guided by a psychiatrist's recommendations relayed by the BHS to the prescribing primary care physician), and disease management elements (education and activation of patient and provider and more careful monitoring and sustained follow-up over the next year via phone contact). It is hypothesized that CC will have superior clinical effectiveness (measured in terms of symptom reduction, quality of life, and function). It is also hypothesized that although direct health care costs will be higher for CC than for usual care, indirect costs will be lower and cost-effectiveness analysis will support the adoption of CC as a preferred model of care.